Virtualization, an emerging technology which is garnering growing interest from corporate customers, allows a server to run multiple instances of an operating system. This makes it easier for corporations to consolidate many applications on a single hardware server and provides a level of reliabilty.

Microsoft said that it has developed software to simplify the installation of Linux distributions from Red Hat and Novell SuSE to run on Virtual Server 2005 R2 on Windows. In addition, Microsoft will provide technical support customers running Windows and Linux side by side.

"We’ve made a long-term commitment to make sure that non-Windows operating systems can be run in a supported manner, both on top of Virtual Server and our future virtualization products," said Zane Adam, director of Windows Server product marketing, in a statement.

Microsoft has said that the server edition of Windows Vista will have virtualization built into it. Specifically, it said it is developing so-called hypervisor software, code-named Viridian, to host multiple operating systems on one machine.

Microsoft faces competition in the market from EMC subsidiary VMware and increasingly the Xen project that's being built into forthcoming versions of Suse Linux Enterprise Server and Red Hat Enterprise Linux.